Miller v. Bank of America, TA et al
Filing
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ORDER granting defendants' Unopposed Motions to Dismiss ( 15 , 17 ) with prejudice. Signed by Judge Anthony J. Battaglia on 4/19/16. (kas)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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SHAWN C. MILLER,
Case No.: 15cv02701 AJB (MDD)
Plaintiff,
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ORDER GRANTING DEFENDANTS’
UNOPPOSED MOTIONS TO
DISMISS
v.
BANK OF AMERICA, N.A.; MTC
FINANCIAL dba TRUSTEE CORPS.;
and DOES 1 through 100, inclusive,
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(Doc. Nos. 15, 17)
Defendants.
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Defendants Bank of America, N.A. (“Bank of America”) and MTC Financial dba
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Trustee Corps. (“MTC”) (collectively “Defendants”) have filed motions to dismiss
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plaintiff Shawn C. Miller’s (“Plaintiff”) first amended complaint, (Doc. No. 10), in its
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entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 15, 17.) Upon
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review of the motions, the Court finds them suitable for determination on the papers and
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without oral argument pursuant to Local Rule 7.1.d.1. Accordingly, the motion hearing
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set for May 12, 2016 at 2:00 p.m. in Courtroom 3B is vacated. As set before more fully
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below, Defendants’ unopposed motions to dismiss are GRANTED.
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I.
BACKGROUND
The following facts are taken from Plaintiff’s first amended complaint and are
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accepted as true by the Court for the limited purpose of resolving the instant motions. See
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Vasquez v. L.A. Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007).
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At all relevant times, Plaintiff owned a single-family residence located at 304
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Kolmar Street, La Jolla, California (“La Jolla Property”). (Doc. No. 10 ¶ 6.) On June 16,
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2005, Plaintiff obtained a subprime loan for $1,300,000 from Bank of America. (Id. at ¶
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11.) Defendants prepared written documentation of Plaintiff’s income, prepared a
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uniform residential loan application, and provided Plaintiff with unsigned copies of the
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application. (Id. at ¶ 13.) The loan documents prepared by Defendants erroneously
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overstated Plaintiff’s monthly gross and net income by not accounting for any basic
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living expenses. (Id. at ¶¶ 14, 23.) Due to this error, a fully amortized payment on the
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loan exceeded Plaintiff’s income and repayment of the loan was not feasible. (Id. at ¶ 23.)
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Plaintiff executed the loan documents before a notary public. (Id. at ¶ 24.) Upon
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obtaining the loan, Plaintiff was not advised that the La Jolla Property appraisal had been
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inflated to secure both a first and second note and deed of trust. (Id. at ¶ 28.)
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Additionally, despite being told he would not be charged prepaid finance charges,
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Plaintiff was charged excessive fees at the close of escrow. (Id. at ¶ 17.)
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On December 20, 2007, Defendants provided Plaintiff with an unsigned federal
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truth in lending disclosure statement, which did not include repayment terms. (Id. at ¶
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16.) Plaintiff attempted to negotiate multiple settlement agreements with agents of Bank
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of America and mailed a loan modification package to Bank of America with a
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refundable deposit of $65,000. (Id. at ¶ 29.) Defendants arbitrarily refused to agree to
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proposed repayment terms or to negotiate an agreement, and rejected Plaintiff’s request
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for a long-term and affordable loan modification program. (Id. at ¶ 30.) On March 26,
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2012, Defendants recorded a notice of default and initiated foreclosure proceedings
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against Plaintiff. (Id. at ¶ 31.) Prior to initiating foreclosure proceedings, Defendants
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failed to provide any loan modifications or loan counseling to Plaintiff. (Id.)
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On December 2, 2015, Plaintiff filed his original complaint. (Doc. No. 1.) On
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January 26, 2016, Defendant Bank of America filed a motion to dismiss Plaintiff’s
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complaint, (Doc. No. 4), which was followed by MTC’s motion to dismiss on January 27,
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2015, (Doc. No. 6). Plaintiff thereafter amended his complaint and the Court denied the
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motions to dismiss as moot. (See Doc. Nos. 8, 9.) After Plaintiff filed a first amended
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complaint, Defendants again moved to dismiss Plaintiff’s claims. (Doc. Nos. 15, 17.)
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MTC also filed a request for judicial notice. (Doc. No. 17-2.) To date, Plaintiff has not
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filed an opposition to either pending motion to dismiss.
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II.
LEGAL STANDARDS
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A.
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A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a plaintiff’s
Motion to Dismiss
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complaint. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “A court may
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dismiss a complaint as a matter of law for (1) lack of cognizable legal theory or (2)
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insufficient facts under a cognizable legal claim.” SmileCare Dental Grp. V. Delta Dental
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Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (internal citation omitted). However, a
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complaint will survive a motion to dismiss if it contains “enough facts to state a claim to
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relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
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In making this determination, a court reviews the contents of the complaint, accepting all
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factual allegations as true, and drawing all reasonable inferences in favor of the
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nonmoving party. Cedars-Sinai Med. Ctr. V. Nat’l League of Postmasters, 497 F.3d 972,
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975 (9th Cir. 2007). Notwithstanding this deference, the reviewing court need not accept
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legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is also improper
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for a court to assume “the [plaintiff] can prove facts that [he or she] has not alleged.”
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Associated General Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 526
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(1983). However, “[w]hen there are well-pleaded factual allegations, a court should
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assume their veracity and then determine whether they plausibly give rise to an
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entitlement to relief.” Iqbal, 556 U.S. at 679.
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B.
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Generally, a district court’s review on a motion to dismiss is limited to the
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complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, “a
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court may take judicial notice of matters of public record,” id. at 689 (internal quotations
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and citations omitted), and of “documents whose contents are alleged in a complaint and
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whose authenticity no party questions,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.
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1994), overruled on other grounds by Gailbraith v. Cnty. Of Santa Clara, 307 F.3d 1119
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(9th Cir. 2002). Pursuant to Federal Rule of Evidence 201, a court may take judicial
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notice of an adjudicative fact not subject to “reasonable dispute,” that is “generally
Judicial Notice
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known within the territorial jurisdiction of the trial court” or is “capable of accurate and
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ready determination by resort to sources whose accuracy cannot reasonably be
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questioned.” Courts may properly consider judicially noticed facts on a motion to dismiss
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without converting the motion into one for summary judgment. Mullis v. United States
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Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987).
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III.
DISCUSSION
MTC’s Request for Judicial Notice
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A.
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MTC requests the Court take judicial notice of certain public records relating to
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Plaintiff’s first amended complaint. (Doc. No. 17-2.) The public records include a deed of
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trust, (Doc. No. 17-2, Exh. A), an assignment of deed of trust, (Doc. 17-2, Exh. B), a
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corporation assignment of deed of trust/mortgage, (Doc. No. 17-2, Exh. C), a notice of
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default, (Doc No. 17-2, Exh. D), a substitution of trustee, (Doc. No. 17-2, Exh. E), and a
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notice of trustee’s sale, (Doc. No. 17-2, Exh. F). Plaintiff has not objected to the
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authenticity of any of the preceding documents, and attaches two of these documents to
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his first amended complaint. (See Doc. 10, Exhs. A, B.) The documents MTC requests
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judicial notice of are properly recorded documents from the San Diego County
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Recorder’s Office, the authenticity of which cannot reasonably be questioned.
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Accordingly, the Court may properly consider those documents in ruling on Defendants’
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motions. MTS’s request is therefore GRANTED. (Doc. No. 17-2.)
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Defendants’ Motions to Dismiss
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B.
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Plaintiff’s first amended complaint asserts three causes of action, alleging (1)
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California’s non-judicial foreclosure scheme violates the Due Process Clause of the
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Fourteenth Amendment; (2) Defendants violated Plaintiff’s due process rights by seizing
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and transferring title to the property without affording Plaintiff adequate notice and an
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opportunity to be heard; and (3) Bank of America violated Plaintiff’s rights under the
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Equal Protection Clause by discriminating against individuals who have filed for
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bankruptcy. (See Doc. No. 10.) Although not referenced in the first amended complaint,
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Defendants challenge Plaintiff’s causes of action as though brought under 42 U.S.C. §
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1983.1 Defendants contend Plaintiff fails to state a claim because courts have rejected the
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argument that California’s non-judicial foreclosure scheme violates due process. (Doc.
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Nos. 15-1 at 6; 17-1 at 10.) Similarly, Defendants argue they are not state actors and
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therefore Plaintiff cannot state a claim under the Fourteenth Amendment. (Doc. Nos. 15-
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1 at 6–7; 17-1 at 9–13.)
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“Section 1983 imposes civil liability upon an individual who under color of state
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law subjects or causes, any citizen of the United States to the deprivation of any rights,
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privileges or immunities secured by the Constitution and laws.” Franklin v. Fox, 312
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MTC’s motion to dismiss argues that Plaintiff incorrectly relies on §§ 1331 and 1343 for
jurisdiction, when Plaintiff’s claims are more appropriately brought under § 1983. (Doc.
No. 17-1 at 8.) Neither Defendant challenges the Court’s subject matter jurisdiction over
Plaintiff’s claims. However, the Court does construe Plaintiff’s allegations as an attempt
to assert a violation of § 1983. See Kuder v. Haas, No. 2:10CV00404, 2010 WL
4983455, at *5 (E.D. Cal. Dec. 2, 2010), report and recommendation adopted, No.
2:10CV00404, 2011 WL 346442 (E.D. Cal. Feb. 1, 2011) (“Plaintiff’s allegations of
violations of his Fourteenth Amendment due process rights as a result of the non-judicial
foreclosure and sale of his property necessarily allege a violation 42 U.S.C. § 1983.”); see
also Bellinger v. Wells Fargo Bank, N.A., No. 1:14CV01076, 2014 WL 6389581, at *4
(E.D. Cal. Nov. 14, 2014) (“Causes of action for purported constitutional violations, as
alleged here by Plaintiff, must be brought pursuant to 42 U.S.C. § 1983.”).
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F.3d 423, 444 (9th Cir. 2002) (citing 42 U.S.C. § 1983). “To state a claim under § 1983, a
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plaintiff must allege two essential elements: (1) that a right secured by the Constitution or
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laws of the United States was violated, and (2) that the alleged violation was committed
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by a person acting under the color of State law.” Long v. County of Los Angeles, 442 F.3d
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1178, 1185 (9th Cir. 2006). It is well-settled law that non-judicial foreclosure
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proceedings do not involve “state action,” even though such proceedings are regulated by
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state law. See Apao v. Bank of New York, 324 F.3d 1091 (9th Cir. 2003).
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Plaintiff alleges that Defendants, which are private entities, violated his Fourteenth
Amendment due process rights by proceeding with non-judicial foreclosure on his
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property. The Ninth Circuit Court of Appeals has held that a private entity’s use of a
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state’s non-judicial foreclosure procedures does not constitute state action sufficient to
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support a claim of a violation of Fourteenth Amendment due process rights under § 1983.
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Id. at 1095 (holding that private entities’ foreclosure and sale of plaintiff’s property
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through use of Hawaii’s non-judicial foreclosure sale did not involve state action
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sufficient to support a claimed violation of Fourteenth Amendment due process rights);
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see also Nieves v. World Savings Bank, FSB, 357 Fed. Appx. 843, 844 (9th Cir. 2009)
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(holding that the defendant bank did not violate plaintiff’s due process rights by
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proceeding with a non-judicial foreclosure sale of his property).
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Thus, courts have rejected the proposition advanced by Plaintiff, namely that a
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state’s non-judicial foreclosure process constitutes state action. See, e.g., Tran v.
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Nationstar Mortgage LLC, No. 5:15CV05126, 2016 WL 1535081, at *3 (N.D. Cal. Apr.
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15, 2016) (“It is been held by both the California Supreme Court and the Ninth Circuit
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Court of Appeals that a state’s non-judicial foreclosure process does not constitute state
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action and does not implicate constitutional due process protections.”); Smiley v. JP
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Morgan Chase, No. 14CV01651, 2015 WL 217258, at *4 (N.D. Cal. Jan. 15, 2015) (“In
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the foreclosure context in California, it is well-settled law that non-judicial foreclosure
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proceedings do not involve ‘state action,’ even though such proceedings are regulated by
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state law.”) (internal citation and quotation marks omitted); Bellinger, 2014 WL
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6389581, at *5 (citing cases for the same proposition). Plaintiff has not alleged that
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Defendants are state actors, and as Defendants are private entities, cannot satisfy the
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pleading requirements for a § 1983 claim. Moreover, even if Plaintiff could plausibly
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allege Defendants were state actors, non-judicial foreclosure does not constitute state
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action. Accordingly, Plaintiff’s claims under the Fourteenth Amendment fail as a matter
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of law. Defendants’ motions to dismiss are GRANTED.
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C.
Having granted Defendants’ motions to dismiss, the Court must consider whether
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Leave to Amend
to grant Plaintiff leave to file a second amended complaint. Rule 15(a) of the Federal
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Rules of Civil Procedure governs leave to amend, and provides that courts should freely
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give leave to amend when justice so requires. Although generally applied with “extreme
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liberality,” a court need not grant leave to amend when amendment would be futile.
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DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 188 (9th Cir. 1987).
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Several considerations weigh against granting Plaintiff leave to amend, including
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that amendment would be futile, Plaintiff’s prior opportunity to amend his claims, and
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Plaintiff’s failure to oppose either pending motion. Plaintiff has already amended his
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complaint once as a matter of course following receipt of Defendants’ initial motions to
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dismiss, which raised identical challenges as those asserted in the instant motions. (See
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Doc. Nos. 4, 6.) Defendants’ prior motions afforded Plaintiff notice of the deficiencies in
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his complaint, which Plaintiff failed to cure through amendment. Additionally, further
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opportunity for amendment would be futile, as non-judicial foreclosure does not amount
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to state action and Defendants are private entities. Finally, Plaintiff’s non-opposition is
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notable. Pursuant to Civil Local Rule 7.1.f.3, the failure to file an opposition “may
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constitute a consent to the granting of a motion or other request for ruling by the court.”
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Civ.L.R. 7.1.f.3. For these reasons, the Court declines to grant Plaintiff leave to amend.
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IV.
CONCLUSION
For the above reasons, Defendants’ motions to dismiss are GRANTED WITH
PREJUDICE. The Clerk of Court is instructed to close the case.
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IT IS SO ORDERED.
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Dated: April 19, 2016
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